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Exit Value, BRRR & Yield Analysis
Estimated after-repair value, capital recycling on refinance and the rental strategies available on completion.
Exit value (after repair value — ARV)
Based on the local comparable evidence, there is a clear distinction between standard four-bedroom terraces and the higher-value family homes located on the more desirable reservoir-side streets.
Lower tier
Well-presented four-bedroom terraces, with comparable evidence around £271,000–£275,000, providing a conservative benchmark for value.
Upper tier
Larger four and five-bedroom family homes, where asking prices currently range between £350,000 and £386,000 on streets including Reservoir Road, Reservoir Retreat and Leslie Road.
The proposed scheme sits between these two groups. Following the refurbishment, the property would offer:
- Five genuine bedrooms
- Three bathrooms
- End-of-terrace position
- Location close to the reservoir
- Modern turnkey specification designed for owner-occupier demand
Provided the refurbishment is completed to a high standard, the finished product should compete with the upper tier of comparable family homes rather than the standard terrace market.
Estimated ARV
Conservative
£300,000
Assumes limited premium above the strongest four-bedroom comparables and provides a cautious downside scenario.
Realistic
£325,000–£335,000
Reflects the additional fifth bedroom, third bathroom, improved layout and reservoir location. This is considered the most probable valuation range.
Optimistic
£360,000–£375,000
Assumes a premium finish capable of competing directly with the highest-value local family homes, supported by strong marketing and favourable market conditions.
The realistic scenario is considered the most appropriate assumption for financial modelling. It reflects the property's enhanced accommodation, improved internal layout and desirable reservoir location, while remaining below the highest current asking prices.
BRRR analysis
Assuming a purchase price of £195,000 and refurbishment costs of £35,000, the total development cost is £230,000, excluding Stamp Duty Land Tax, legal fees, finance costs and refinancing expenses. Using a standard 75% loan-to-value refinance, the potential capital recycling position is as follows.
| ARV | 75% refinance | Position vs £230,000 | Outcome |
|---|---|---|---|
| £300,000 | £225,000 | -£5,000 | Approximately £5,000 of development capital remains invested. |
| £325,000 | £243,750 | +£13,750 | Effectively recycles the full purchase and refurbishment costs before acquisition and finance costs. |
| £360,000 | £270,000 | +£40,000 | Fully recycles development capital and releases approximately £40,000 prior to transaction and finance costs. |
These calculations exclude Stamp Duty Land Tax, legal fees, lender fees, valuation fees and any bridging finance interest. Depending on the acquisition structure and funding route, these additional costs will reduce the amount of capital ultimately recycled. Nevertheless, the realistic valuation scenario demonstrates the potential to recover the majority, if not all, of the purchase and refurbishment capital on refinance.
Rental strategy & yield analysis
The completed property offers flexibility across several investment strategies. Gross yields are modelled against a total development cost of £230,000, before costs and voids.
| Strategy | Estimated annual income | Gross yield |
|---|---|---|
| Exempt / supported accommodation* | £68,400–£90,000 (£5,700–£7,500 pcm) | Approximately 30–39% |
| Professional room-by-room letting | £30,000 (£2,500 pcm) | Approximately 13% |
| Conventional single-family let | £22,200 (£1,850 pcm) | Approximately 10% |
*Subject to the appropriate operational model, provider partnerships, accreditation and ongoing compliance.
Strategy
Income band
Monthly rent
£5,700
Annual income
£68,400
Gross yield
29.7%
Subject to the appropriate operational model, provider partnerships, accreditation and ongoing compliance. Optional upside strategy, not the core case.
Assuming an ARV of approximately £325,000–£335,000, the project has the potential to recycle the majority of the initial development capital while simultaneously producing a approximately 10% gross yield from a straightforward whole-house rental — without the additional licensing, management intensity and regulatory requirements associated with a traditional HMO operation. While the supported accommodation model offers significantly higher potential income, it should be regarded as an optional upside strategy rather than the core investment case.
Interested in this deal?
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